Harare - Zimbabwe wants foreign mining companies to spend 75 percent of their income inside the country through native procurement and local payments or risk having to mandatorily cede 51 percent control to black groups.
Mines and Mining Development Minister Walter Chidhakwa said that foreign firms seeking exemption from the 51-49 percent indigenisation compliance threshold had to spend more in Zimbabwe as the country continued to battle cash shortages.
“Conformity with the indigenisation requirement shall be by spending 75 percent of their gross revenue here in Zimbabwe,” Chidhakwa said. “Either you go for the (49 percent foreign ownership) or the 75 percent local spending. I can tell you many companies are keen on the 75 percent (local) spending.”
Last year President Robert Mugabe gave foreign miners a reprieve, clarifying that groups such as Impala Platinum, Anglo Platinum, Sibanye Gold and Asa Resources could keep majority shares in local units as long as they spent more inside the country.
But now the government believes that increased local spending by the miners would help breathe fresh liquidity impetus into the economy.
Impala Platinum’s unit in Zimbabwe, Zimplats, said it spent about $51 million (R680 million) on local payments during the quarter to end March and paid $10 million in taxes.
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“We are already having to work with local suppliers and miners pay royalties and taxes to the government. The international transactions are not going through and shareholders are also having difficulties getting money out of Zimbabwe,” said a manager with a mining company.
Although the cash woes have been mounting, Finance Minister Patrick Chinamasa has refused to print more local bond notes.
Data from the Reserve Bank of Zimbabwe shows that the country now has about $130 million worth of bond notes and coins - which have equal value to the greenback - in circulation.
But this has not been enough to offset the cash shortages at the banks amid a mounting backlog of cross border payment transactions.
Zimplats also confirmed that it had disposed of treasury bills issued by the government to settle a debt owed by the central bank.
“The treasury bills were disposed during the quarter for a consideration of $21 million, which was received in the quarter. The treasury bills had been discounted, using a rate of 27.5 percent to arrive at a fair value of $13 million,” Zimplats said last week.